Smart(er) EV Charging Could Slash Utility Costs By $30 Billion

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Welcome to another edition of This is Why We Can’t Have Nice Things. The EV charging management firm ev.energy has just released a new study showing that next-level charging programs could yield $30 billion in savings on utility costs in the US, which works out to a much-welcome cut of about 10% per ratepayer by 2035 whether they own an EV or not. That’s nice, except the people in charge of federal energy policy at the present time are determined to stomp the EV movement into ground. Still, hope springs eternal, so let’s take a look at that new report

$30 Billion In Savings From Smart EV Charging

It costs money to charge up an EV, but ev.energy is among those pointing out that, unlike gasmobiles, EVs sport large batteries that can interact with the local grid. From that perspective, EVs are a community-wide energy storage asset that can be charged and discharged strategically to help prevent power disruptions and improve grid reliability for everyone, while enabling utilities to reduce the expense of grid upgrades for everyone.

The new report was released today under the self explanatory title, The Utility Playbook for Turning EV Grid Risk into a $30 Billion Opportunity, with ev.energy joined by research partner The Brattle Group. “Uniquely, EVs provide significant levels of energy flexibility, saving utilities on costly, premature upgrades,” ev.energy emphasized in a press statement.

“Each actively managed EV can save utilities an average of between $145-$575 per year for every customer enrolled,” they added.

“Adding bidirectional charging, or vehicle-to-grid, more than doubles these benefits, providing an annual avoided cost exceeding $1,300 per vehicle,” they added again for good measure.

Why Can’t We Have Nice Things?

Critics are fond of characterizing EVs as expensive playthings for the elite, but then again, so are conventional cars. Transportation is the second-highest single household expense, and owng a vehicle is a particular squeeze for lower-income households.

A 2023 report from the US Bureau of Transportation Statistics sheds some light on the subject. “In 2022, households with income lower than $25,000 who owned at least one vehicle spent 38% of their after-tax income on transportation; while households with the same income who did not own or lease a vehicle spent 5% of their after-tax income on transportation,” BTS noted. The agency also observed that the car-no car difference held steady across income groups.

Of course, many more lower-income households would benefit if many more mass transportation options were available across the board, which will not happen any time in the foreseeable future. In the US, that’s too far of a policy river to climb.

The alternative is to make car ownership more affordable, and EVs offer an opportunity to get that done. Alongside the falling cost of EV batteries, auto industry analysts note that the long term savings on fuel and maintenance can favor an EV over its traditional counterparts on a TCO (total cost of ownership) basis. Smart EV charging programs can provide EV owners with a unique opportunity for additional savings.

Managed EV Charging Vs. Time-of-Use

The new ev.charging report affirms previous studies that draw attention to the state of modern grid technology in general and the virtual power plant movement in particular, in which many thousands of widely disbursed energy users are precisely coordinated to achieve the greater goals of the local grid.

“Past analyses have shown that Virtual Power Plants can deliver reliable power at costs up to 60% lower than traditional generators,” noted Ryan Hledik, a Principal at The Brattle Group. Hledik also emphasized that the report affirms the flexibility of EV charging as a significant new tool for utilities to improve affordability as well as reliability.

Considering that more than 90% of US households own at least one vehicle, the payoff from managed EV charging will grow alongside EV adoption. “Managed charging offers a superior route to deliver maximum savings for drivers and utilities, while meeting growing energy demand and supporting grid optimization,” ev.energy explains.

To be clear, ev.energy’s vision of managed EV charging is not the same as the familiar Time-of-Use incentives. Discounted ToU rates motivate EV drivers to charge up at off-peak hours. That works for now, but as EV adoption expands the concern is that a secondary peak will develop.

The new report makes the case for a more sophisticated approach by stacking six areas of savings made possible through managed EV charging and vehicle-to-grid technology, based partly on the findings from ev.energy’s three dozen managed charging programs in the US and Canada.

In California, for example, a pilot managed charging project achieved 98% off-peak energy use, compared to the rate of just 60-70% achieved by Time of Use discounts. Meanwhile, a case study in Indiana revealed that savings can be realized even with just 5% EV adoption in a utility’s service territory.

Next Steps For The US Vehicle Electrification Movement

As calculated by ev.energy, more than 800 utilities in the US have already passed the 5% EV adoption tipping point. That figure could climb a bit as the fallout from the premature demise of the $7,500 EV tax credit sinks in and car buyers rush to take advantage before it expires on September 30.

And, rush they are. EV sales in the US increased at the unimpressive rate of 6% as of July of this year compared to 2024, but a sudden spurt of interest emerged between June and July, after the Republican majority in Congress eliminated the tax credit in their new “OBBA” tax bill.

“Electric vehicle (EV) sales spiked 26.4% last month as consumers rushed to buy cars before the federal government’s $7,500 EV tax credit expires this fall,” Kelley Blue Book reported on August 19, citing data from Cox Automotive. The $4,000 credit for used EVs will also expire on September 30, leading to a 23.2% jump in sales for July over June as tracked by Cox.

As for the long term outlook for EV adoption, after Congress passed the new tax bill both Ford and General Motors went out of their way to announce ambitious new billion-dollar plans to introduce more affordable EVs into the US market, partly based on the low cost of LFP (lithium-iron-phosphate) battery technology.

The furious pace of the public charging station buildout in the US is also lends support to the post-tax credit outlook, with high-profile roadside convenience stores like Royal Farms and fast food chains like Waffle House among many others lending their familiar brand names to the vehicle electrification movement.

That’s all well and good, but without support from federal policy makers the EV transition will continue to underperform in the US, and households will have to wait for some much-needed relief from high transportation costs and utility bills. If you have any thoughts about that, drop a note in the comment thread. Better yet, find your representatives in Congress and let them know what you think.

Photo (cropped): Sophisticated new EV charging systems have the potential to slash $30 billion from utility costs, leading to an across-the-board 10% savings on electricity bills by 2035 (courtesy of ev.energy).